Canada is massively building public transport. But to say things aren’t going according to plan would be an understatement.
In Toronto, a 12-mile stretch of Eglinton Avenue is still a mess, 11 years later, with a massive excavation site where it intersects Yonge Street. Bus journeys along the main thoroughfare remain shocking as construction of a rail system that was supposed to open two years ago continues. That can only happen next year.
Last month, an elevated rail network in Montreal known as the Réseau Express Métropolitain delayed some of its openings until 2024. And previous plans for another network costing $10 billion were reversed when the Caisse de Dépôt et Placement du Québec, the provincial pension and investment fund, left the project after many residents said the downtown area would disfigure the city and the transportation authority said it would transfer too much business from the existing routes.
Aside from delays, cost overruns, and general headaches, what these projects have in common is that they were structured as public-private partnerships, an approach that first gained popularity in Canada in the 1990s. Rather than going the traditional route of managing, owning, and maintaining the project, governments make a deal with a company—usually a dedicated company formed by several companies—to handle the work under contract.
But the difficulties in those transit projects have now taken the shine off such partnerships.
“There’s definitely a rethink of public-private partnerships in Canada, and it’s accelerated by the transportation sector,” said Matti Siemiatycki, the director of the Infrastructure Institute at the University of Toronto’s School of Cities. “Transit just added a whole different level of complexity and the record is definitely mixed.”
Initially, the partnerships were mainly used to build and maintain large public buildings such as hospitals. For the most part, said Professor Siemiatycki, they generally worked well.
In theory, working with a group of companies can provide expertise and skills that governments do not have to complete the project efficiently and on time.
And while it costs cities more to use partnerships, those extra upfront costs mean that overruns can be passed on to private sector partners and sanctions can be imposed to discourage or prevent delays.
“It’s like an insurance policy that if something goes wrong later, it’s the private sector’s responsibility,” said Professor Siemiatycki.
That idea, he said, has been shaken up badly. In 2020, Crosslinx, the private consortium behind the Toronto rail project, sued the local transit agency for CAD 134 million in additional costs they believe were related to the pandemic. The two parties reached an out-of-court settlement, with the transit authority agreeing to refund Crosslinx an undisclosed amount.
“Governments always said they paid more up front, but they were well protected in the event of major cost overruns, delays or poor delivery,” said Professor Siemiatycki. “What has happened in practice is that a lot of those risks and the costs of those risks have been passed back to governments. It is becoming clear that the government is the risk-holder of the last resort.”
And the contractual nature of the partnerships has often left the public and even politicians in the dark about what exactly is going on.
Not all public-private public transport partnerships have soured. Professor Siemiatycki said Vancouver’s Canada Line train system has been a success overall, as has a light rail system in Ontario’s twin cities of Kitchener and Waterloo.
It’s also unclear whether using the old-fashioned approach would have kept the projects on track with their timelines and budgets. For example, the Toronto Transit Commission managed a major expansion of one of its subway lines for years. It opened in 2017, two years later than expected. The Canadian dollar budget of 1.5 billion dollars had more than doubled.
It is not just governments that are questioning the value of partnerships. SNC-Lavalin, a Montreal engineering firm that is a key partner in the Toronto and Ottawa projects, has renounced public-private partnerships for the foreseeable future.
However, transit projects are clearly a major priority for Canada. Among other things, the federal government considers them important instruments for achieving the country’s targets for reducing CO2 emissions.
With more projects on the way, Professor Siemiatycki said it would be critical for the country to find a better way to build them.
“It remains a very big problem in Canada,” he said. “There is a lot of hope and ambition associated with major investments in public transport. But it’s really not common to get the delivery right.”
This week’s Trans Canada section was curated by Vjosa Isai, a news assistant for DailyExpertNews in Canada.
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Born in Windsor, Ontario, Ian Austen was educated in Toronto, lives in Ottawa and has reported on Canada for DailyExpertNews for the past 16 years. Follow him on Twitter at @ianrausten.
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